O'Malley Gas Tax Plan Adds 20 Cents Per Gallon

Maryland Gov. Martin O'Malley said he will propose adding a 6-percent sales tax to the existing tax on gasoline, as a way to help pay for road improvements in the state.

In an interview with WTOP radio on Monday, O'Malley said he wants to end the sales tax exemption on gasoline and called the current method of taxing gasoline "outdated."

Currently, gas is tax at 23-cents per gallon and is exempt from the state sales tax.

"We haven't had any increase in our primary source of transportation funding since the early 1990s," he said. "The best option, it would seem to me, would be to get away from the flat tax and move toward a percentage."

O'Malley said he'd recommend phasing in a 6-percent sales tax in addition to the 23-cent flat tax. The sales tax would be phased in by 2 percent each year for three years.

O'Malley said that if the state had indexed the gas tax in the mid-1990s, the state would have an additional $4 billion in its budget.

The governor said the money would go toward transportation solutions. When asked by reporter Mark Seagraves if he'd support legislation to protect money for transportation from being spent on other needs, O'Malley responded, "Yes."

Members of the business community, including the , have in the state. O'Malley's plan, however, differs from the plan recommended by the state's Blue Ribbon Commission on Transportation Funding, which called for a 15-cent increase in the gas tax, phased in over three years.

The average price of gasoline in Maryland is now about $3.50, meaning that a 6 percent sales tax would add roughly 21 cents to the price after three years.

The blue ribbon panel had recommended raising more than $800 million annually through a combination of increases in the gas tax and on a variety of fees, including vehicle registrations. O'Malley's plan would raise more than $600 million each year by simply adding the sales tax.

O'Malley said the economy will benefit from more road projects and the reduction in congestion.

"None of us likes this," he said. "But the cost to us of doing nothing is greater. And to do nothing is irresponsible."

O'Malley will offer more details on his transportation plan during his State of the State address on Wednesday.